People Are Flipping Out: California Is On The Brink Of Collapse And The Panic Is Quickly Spreading Throughout The Nation! Will It Be The Catalyst Of An Impending Market Crash?

2010: Every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year. The move in oil in the past week alone has almost entirely wiped out the most recent stimulus.

Investors — certainly U.S. stock investors — would be wise to keep one eye on the price of oil, currently pushing $90 per barrel. Oil traded up 10 cents to $89.29 on Monday at mid-day.

And the reason is obvious enough: once again, oil is approaching the danger zone, from a U.S. GDP growth standpoint.

No one knows precisely at what point oil begins to substantially hinder consumer spending and slow commercial activity — but this much is known: every $1 per barrel rise in oil decreases U.S. GDP by $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year.

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If the average U.S. price of gasoline, currently about $2.94 per gallon for unleaded regular, rises and stays above $3, that would cause consumers to think that ‘higher gasoline prices are ahead,’ and they’ll likely adjust their discretionary spending. Similarly, an oil price that rises and stays above above $100 per barrel has a similar psychological effect.